Of Economic Experts, Recessions and the Prepared Analytical Mind
Econocator points us today towards a thoughtful note from A Dash of Insight on the nature of economic forecasting and commentary and ultimately how to navigate what is essentially a very tight web of differing opinions, views and perspectives. The main point of departure is the investor's consumption of information and news but I think that the ideas can be easily expanded to cover economists and other practitioners alike. The main argument to take away seems to be the following ...
The single most important takeaway: Beware of those claiming to know more about everything, seeing what no one else sees. A stronger approach is to identify and blend knowledge from true experts.
Ok, this might not be particularly groundbreaking and could essentially be aligned I think with common sense. However, if we take a closer look at what the article actually does and how it argues in relation to the differing views on the effects of the recent turmoil in financial markets (and whether to believe those who predict a recession or not) I think that a very important point emerges as a general lesson regarding the way we (should?) follow economic, financial news and research. At this point, we should not get bogged down with the fact that 'A Dash of Insigt' implicitly notes how it is traditionally 'non-economists' who are most bearish in the current environment although all the current market turmoil does go to show how powerful a reinforcing current of opinion and analysis can be in forming the general news landscape. Rather I am intrigued by the nature of analysis and how the article seeks to juxtapose what are coined as a 'Range of Forecasters'.
I have only been in the game of economic forecasting and following economic/financial news and research for a comparatively short time. However, one thing which I have contended at this point to be one of the most important lessons on an overall basis is to deploy discourse analysis as a fundamental tool to navigate a world of immense complexity in terms of variety and depth of information. At this point the first question to probably pop into your head is what discourse analysis actually is? After a quick stop at Wikipedia, the answer just revealed to you will likely lead you to another question along the lines of why the h'ck I am promoting the use of linguisitic analysis tools in the form of (...) Discourse analysis (DA), or discourse studies, is a general term for a number of approaches to analyzing written, spoken or signed language use. Yet, if we think of it is not that controversial I believe. In this way, one very real benefit which accrues from deploying discourse analysis is that you get a very strong image of the underlying currents in the debate. We see this for example in A Dash of Insight's attempt to cluster the range of forecasters with respect to their general perception of the possibility of recession in the US economy or not. Also, I sincerely belive that in order to follow the after all much reasonable ethos of always being objective and on guard as a consumer of information discourse analysis makes a valuable companion. The merits of discourse analysis thus goes beyond the obvious benefit of providing an overview of a complex information landscape. Discourse analysis also allows you to see and follow the evolution and change of opinions and perspectives on important questions within an academic and professional field. If you want to look at examples of the implicit use of discourse analysis I can point to my notes on the global economy and global imbalances which deliberately seeks to package the overall analytical approach on the basis of dicourse analysis. As a final note, we should also always remember that we ourselves are proponents of a discourse which we tend to share with others who believe as we do. In this way, a second benefit of looking at discourses is that it allows you and essentially forces you to take a reflexive position on the basis of your own perception. In my own case I am course pushing the 'demography.matters' discourse but I also crucially believe that the right answer to our questions is revealed as a function of a fusion of what essentially is a mixture of many different perspectives and ways to conceptualize the world of economics and finance be it in the realm of theory or more market oriented matters.